When a big news story breaks, it is interesting to look at what newspapers and columnists were saying about the same subject years or even months earlier. Here, for example, is what the Telegraph advised its readers two years ago:
Pensioners who are fed up with Britain’s high taxes and miserable weather can escape both without leaving the European Union by moving to an English-speaking country with a flat rate of income tax at 5 per cent or annual allowances of more than £14,600 tax-free. Better still, savers who have retired can receive interest from bank deposits and sharholdings entirely free of income tax – and inheritance tax has been abolished on this Mediterranean island.
Whooppie do! Go to Cyprus and dodge your taxes.
I don’t know if this is a peculiarly British thing, possibly it’s a legacy of the Empire, but Brits abroad seem to expect the same legal standards to apply wherever they are. They buy houses in countries with completely different concepts of property law from the UK and are then shocked when they find they don’t actually own what they thought they had bought. They expect to take their yachts to the Indian Ocean and be as safe as they would be if they were pootling around the Isle of Wight. And they take their money to a tax haven pumped up with shady Russian money then express outrage when the state can’t cover their deposits in the insolvent banks.
As Phillip Inman points out, Cyprus has one of the highest per capita GDP ratios in the Mediterranean, yet its banks and government are completely bust. Should tax-avoiders be bailed out with tax money by the very countries from which they had fled? Worse still, should EU taxpayers cover the losses of Russian ‘byeeznessmen’?
Many are blaming the horrid EU for stealing people’s savings but if Cyprus were not a member of the EU, things might have been even worse. It was the IMF that pushed the EU for stricter bailout conditions. Left to their tender mercies, who knows what might have happened?
As it is, instead of their banks and their country going bankrupt and them losing everything, Cypriot bank account holders are only being asked to lose 10 percent, which, under the circumstances, sounds like a pretty good deal. (Actually, as Frances explains, the depositors’ money hasn’t simply been taken. They have been given shares in the banks in return. However, as the banks are basket-cases, this probably amounts to the same thing.) It’s tough luck on the locals of modest means who had nowhere else to bank but isn’t that always the case when things like this happen? Hopefully, the small depositors may yet be saved.
Still, depositors will moan about being ‘robbed’ by the EU. The richer they are, the louder they will moan. British expats will probably be among some of the loudest moaners. It’s a pity for them that they can’t sue the Daily Telegraph for encouraging them to take their gold to Cyprus in the first place.
Washington Post – Everything you need to know about the Cyprus bailout
The Economist – Bank shareholders and large depositors should be forced to lose money – but, given the risk of spreading panic, not yet!
Chris Dillow – It’s all about power – and those with the least power lose out.
Pawel Morski – The hedge funds win again!